Understanding franchisors’ disclosure obligations: Lessons from the Federal Court

Franchisors are subject to mandatory requirements under the Franchising Code of Conduct. These include various disclosure requirements and an overarching obligation to act in good faith. Although it was not a food industry case, the recent decision against Ultra Tune is also relevant to food franchises and other franchise-like arrangements. In the Ultra Tune case, proceedings were brought by the ACCC and considered some of these requirements. This article draws lessons from the Court’s interpretation of the requirement to provide ‘sufficient detail’ with respect to financial information, and also considers other obligations placed on franchisors under the Franchising Code.

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